Logo of jester cap with thought bubble.

Image source: The Motley Fool.

DATE

Saturday, October 18, 2025 at 7 a.m. ET

CALL PARTICIPANTS

  • Managing Director & Chief Executive Officer — Sandeep Bakhshi
  • Executive Director — Sandeep Batra
  • Executive Director — Anindya Banerjee

Need a quote from a Motley Fool analyst? Email [email protected]

TAKEAWAYS

  • Profit Before Tax Ex-Treasury -- INR 161.64 billion, up 9.1% year-on-year and 3% sequentially.
  • Net Interest Income (NII) -- INR 215.29 billion, up 7.4% year-on-year; sequentially down from INR 216.35 billion, which included INR 3.61 billion of interest on tax refund in the prior quarter.
  • Profit After Tax -- INR 123.59 billion, growing 5.2% year-on-year.
  • Consolidated Profit After Tax -- INR 133.57 billion, a 3.2% increase year-on-year.
  • Core Operating Profit -- INR 170.78 billion, up 6.5% year-on-year.
  • Loan Growth (Domestic Portfolio) -- 10.6% year-on-year, with sequential growth of 3.3% compared to 1.5% in the previous quarter.
  • Retail Loan Growth -- 6.6% year-on-year and 2.6% sequentially; retail portfolio including nonfund-based outstanding comprised 42.9% of total portfolio.
  • Business Banking Portfolio Growth -- 24.8% year-on-year and 6.5% sequentially.
  • Retail Loan Segment Metrics -- Mortgage portfolio up 9.9% year-on-year and 2.8% sequentially; auto loans up 1.4% year-on-year and flat sequentially; commercial vehicles and equipment portfolio up 6.4% year-on-year and 0.5% sequentially; personal loans declined 0.7% year-on-year, rose 1.4% sequentially; credit card portfolio up 6.4% year-on-year and 8.4% sequentially.
  • Deposits -- Average deposits up 9.1% year-on-year and 1.6% sequentially; total deposits up 7.7% year-on-year and 0.3% sequentially.
  • Liquidity Coverage Ratio -- Averaged about 127% for the quarter.
  • Net NPA Ratio -- 0.39% as of September 30, 2025, down from 0.41% in the prior quarter and 0.42% one year ago.
  • Provisions -- INR 9.14 billion in the quarter, equivalent to 5.4% of core operating profit and 0.26% of average advances.
  • Provision Coverage Ratio on Nonperforming Loans -- 75% at quarter-end.
  • Contingency Provisions -- INR 131 billion, representing about 0.9% of total advances.
  • Capital Adequacy -- CET1 ratio of 16.35% and total capital adequacy ratio of 17% as of September 30, 2025, inclusive of profits for first half 2026.
  • Net Interest Margin (NIM) -- 4.30%, vs. 4.34% prior quarter and 4.27% prior year; domestic NIM at 4.37% this quarter compared to 4.40% last quarter.
  • Cost of Deposits -- 4.64%, down from 4.85% prior quarter and 4.88% in comparable period last year.
  • Noninterest Income (Excluding Treasury) -- INR 73.56 billion, up 13.2% year-on-year and 1.3% sequentially; fee income at INR 64.91 billion, increasing 10.1% year-on-year and 10% sequentially; retail, rural, and business banking customers accounted for 78% of total fees.
  • Dividend Income from Subsidiaries -- INR 8.1 billion, compared to INR 13.36 billion prior quarter and INR 5.41 billion in Q2 prior year.
  • Operating Expenses -- Up 12.4% year-on-year and 3.6% sequentially; employee expenses up 5% year-on-year and down 8.5% sequentially; nonemployee expenses up 17.3% year-on-year and 12.2% sequentially.
  • Gross NPA Additions -- INR 50.34 billion, versus INR 62.45 billion prior quarter and INR 50.73 billion prior year; gross NPA additions from retail and rural portfolios at INR 40.49 billion, lower than INR 51.93 billion prior quarter; gross NPA additions from corporate and business banking portfolios at INR 9.85 billion, compared to INR 10.52 billion in the prior quarter.
  • Recoveries and Upgrades from Gross NPAs (Excluding Write-Offs/Sales) -- INR 36.48 billion this quarter; retail and rural portfolios at INR 26.1 billion; corporate and business banking portfolios at INR 10.38 billion.
  • Gross NPAs Written Off -- INR 22.63 billion in the quarter; NPA sales of INR 0.06 billion also occurred.
  • Total Fund-Based and Nonfund-Based Outstanding to Performing Corporate Borrowers Rated BB and Below -- INR 36.61 billion, up from INR 29.95 billion prior quarter; this portfolio represents 0.3% of advances.
  • Total Fund-Based Outstanding Under Resolution -- INR 16.24 billion, or about 0.1% of the total loan portfolio.
  • ICICI Life Insurance Value of New Business Margin -- 24.5% in H1 of this year, up from 22.8% in FY 2025 and 23.7% in H1 prior year.
  • ICICI Life Insurance Profit After Tax -- INR 6.01 billion in H1 and INR 2.99 billion for the quarter, both up from previous year periods.
  • ICICI General Insurance Profit After Tax -- INR 8.2 billion, increasing from INR 6.94 billion prior year; combined ratio at 105.1%, or 103.8% excluding CAT losses.
  • ICICI Securities Profit After Tax -- INR 4.25 billion, down from INR 5.29 billion in the prior-year period.
  • ICICI Bank Canada & U.K. Profits -- Canada: CAD 6.3 million (down from CAD 19.1 million prior year); U.K. USD 6.4 million (vs. USD 8 million prior year).
  • Branch Network -- Increased by 263 in H1; branch count reached 7,246 as of September 30, 2025.
  • Technology Expenses -- Comprised 11% of operating expenses in H1.

SUMMARY

The management confirmed that margins are expected to remain range-bound in the coming quarters, with no major movements anticipated barring unforeseen changes in market dynamics. Discussions indicated that capital is not a constraint, and management is focused on leveraging the current high CET1 ratio to drive risk-calibrated, sustainable growth rather than pursuing aggressive dividend payouts. Actions taken on unsecured retail segments (PL and cards) are now resulting in improved retail asset quality, positioning the bank to increase disbursements in those categories. Nonemployee expense growth in the quarter was attributed to increased retail and marketing spend linked to seasonal factors, with management anticipating a moderation in operating expense growth rates going forward. Management expects to utilize existing contingency provisions as needed under the expected credit loss regime, and does not foresee a material impact from regulatory changes currently under review.

  • Anindya Banerjee stated, "margins should be more or less range-bound. We don't expect any major movements either way," reinforcing stable NIM outlook despite upcoming deposit repricing and monetary policy factors.
  • Management clarified, "capital is not constraining us from growing," emphasizing that CET1 ratios remain elevated even relative to peers, supporting continued expansion.
  • Anindya Banerjee highlighted that slippages and overall retail asset quality have improved sequentially across most segments, citing the impact of prior corrective actions in unsecured lending.
  • No specific guidance was given on year-end loan growth targets, but management noted sequential improvements and continued investment in distribution to capture growth opportunities.
  • Retail, rural, and business banking fees made up about 78% of total fee income this quarter, with strategic focus on digital platforms and ecosystem partnerships to further grow CASA market share.
  • Anindya Banerjee addressed regulatory developments, indicating that use of contingency provisions and overall healthy balance sheet provisioning position the bank to absorb transition to expected credit loss norms without disruption.
  • The builder loan portfolio remains concentrated in established developers, with 1.3% of the exposure internally rated BB and below or classified as nonperforming; sequential growth was cited as supported by portfolio quality.

INDUSTRY GLOSSARY

  • PL: Personal Loan segment within retail lending.
  • CAT Losses: Catastrophic losses, referring to large, infrequent claims often from natural disasters and considered in general insurance reporting.
  • CASA: Current Account Savings Account; proportion of low-cost bank deposits critical for funding structure.
  • KCC: Kisan Credit Card, an agriculture-focused loan product subject to seasonal slippages.
  • NBFC: Non-Banking Financial Company, a key borrower class in the corporate loan segment.
  • HFC: Housing Finance Company, a specific subset of corporate lending relationships.
  • BB and Below: Credit rating classification indicating heightened credit risk, often used for internal risk segmentation.
  • Combined Ratio: In insurance, the sum of loss and expense ratios; a figure above 100% indicates underwriting losses before investment income.
  • ECL: Expected Credit Loss, a forward-looking approach to provisioning mandated by regulators.
  • CET1 Ratio: Common Equity Tier 1 Capital Ratio, a central measure of bank capital adequacy under Basel III guidelines.

Full Conference Call Transcript

Sandeep Bakhshi: Thank you. Good evening to all of you, and welcome to the ICICI Bank earnings call to discuss the results for Q2 of financial year 2026. Joining us today on this call are Sandeep Batra, Rakesh, Ajay, Anindya and Abhinek. At ICICI Bank, our strategic focus continues to be on growing profit before tax, excluding treasury, through the 360-degree customer-centric approach and by serving opportunities across ecosystems and micro markets. We continue to operate within the framework of our values to strengthen our franchise. Maintaining high standards of governance, deepening coverage and enhancing the delivery capabilities with a focus on simplicity and operational resilience are key drivers for our risk-calibrated profitable growth.

The profit before tax excluding treasury grew by 9.1% year-on-year to INR 161.64 billion in this quarter. The core operating profit increased by 6.5% year-on-year to INR 170.78 billion in this quarter. The profit after tax grew by 5.2% year-on-year to INR 123.59 billion in this quarter. Average deposits grew by 9.1% year-on-year and 1.6% sequentially, and average current and savings account deposits grew by 9.7% year-on-year and 2.7% sequentially in this quarter. Total deposits grew by 7.7% year-on-year and 0.3% sequentially at September 30, 2025. The bank's average liquidity coverage ratio for the quarter was about 127%. The domestic loan portfolio grew by 10.6% year-on-year.

The quarter-on-quarter growth in domestic loan portfolio was 3.3% at September 30, 2025, compared to 1.5% at June 30, 2025. The retail loan portfolio grew by 6.6% year-on-year and 2.6% sequentially. Including nonfund-based outstanding, the retail portfolio was 42.9% of the total portfolio. The rural portfolio declined by 1% year-on-year and grew by 0.8% sequentially. The business banking portfolio grew by 24.8% year-on-year and 6.5% sequentially. The domestic corporate portfolio grew by 3.5% year-on-year and 1% sequentially. The overall loan portfolio, including the international branches portfolio, grew by 10% year-on-year and 3.2% sequentially at September 30, 2025. The overall -- overseas loan portfolio was 2.3% of the overall loan book at September 30, 2025.

The net NPA ratio was 0.39% at September 30, 2025, compared to 0.41% at June 30, 2025, and 0.42% at September 30, 2024. During the quarter, there were net additions of INR 13.86 billion to gross NPAs, excluding write-offs and sales. The total provisions during the quarter were INR 9.14 billion or 5.4% of core operating profit and 0.26% of average advances. The provisioning coverage ratio on nonperforming loans was 75% at September 30, 2025. In addition, the bank continues to hold contingency provisions of INR 131 billion or about 0.9% of total advances at September 30, 2025.

The capital position of the bank continue to be strong with a CET1 ratio of 16.35% and total capital adequacy ratio of 17% at September 30, 2025, including profits for H1 2026. Looking ahead, we see many opportunities to drive risk-calibrated portfolio growth and grow market share across key segments. We remain focused on maintaining a strong balance sheet, prudent provisioning and healthy levels of capital, while delivering sustainable and predictable returns to our shareholders. I now hand the call over to Anindya.

Anindya Banerjee: Thank you, Sandeep. I will talk about loan growth, credit quality, P&L details and the performance of subsidiaries. On loan growth, Sandeep covered the loan growth across various segments. Coming to the growth across retail products. The mortgage portfolio grew by 9.9% year-on-year and 2.8% sequentially. Auto loans grew by 1.4% year-on-year and were flat sequentially. The commercial vehicles and equipment portfolio grew by 6.4% year-on-year and 0.5% sequentially. Personal loans declined by 0.7% year-on-year and grew by 1.4% sequentially. The credit card portfolio grew by 6.4% year-on-year and 8.4% sequentially. Within the corporate portfolio, the total outstanding to NBFCs and HFCs was INR 794.33 billion at September 30, 2025, compared to INR 874.17 billion at June 30, 2025.

The total outstanding loans to NBFCs and HFCs were about 4.4% of our advances at September 30, 2025. The builder portfolio, including construction finance, lease rental discounting, term loans and working capital was INR 635.83 billion at September 30, 2025, compared to INR 628.33 billion at June 30, 2025. The builder loan portfolio was 4.1% of our total loan portfolio. Our portfolio largely comprises well-established builders, and this is also reflected in the sequential increase in the portfolio. About 1.3% of the builder portfolio at September 30, 2025, was either rated BB and below internally or was classified as nonperforming. Moving on to credit quality.

The gross NPA additions were INR 50.34 billion in the current quarter compared to INR 62.45 billion in the previous quarter and INR 50.73 billion in Q2 of last year. Recoveries and upgrades from gross NPAs, including write-off -- excluding write-offs and sale were INR 36.48 billion in the current quarter compared to INR 32.11 billion in the previous quarter and INR 33.19 billion in Q2 of last year. The net additions to gross NPAs were INR 13.86 billion in the current quarter compared to INR 30.34 billion in the previous quarter and INR 17.54 billion in Q2 of last year.

The gross NPA additions from the retail and rural portfolios were INR 40.49 billion in the current quarter compared to INR 51.93 billion in the previous quarter and INR 43.41 billion in Q2 of last year. We typically see higher NPA additions from the Kisan credit card portfolio in the first and third quarter of the fiscal year. Recoveries and upgrades from the retail and rural portfolios were INR 26.1 billion in the current quarter compared to INR 25.25 billion in the previous quarter and INR 25.92 billion in Q2 of last year.

The net additions to gross NPAs in the retail and rural portfolios were INR 14.39 billion in the current quarter compared to INR 26.68 billion in the previous quarter and INR 17.49 billion in Q2 of last year. The gross NPA additions from the corporate and business banking portfolios were INR 9.85 billion in the current quarter compared to INR 10.52 billion in the previous quarter and INR 7.32 billion in Q2 of last year. Recoveries and upgrades from the corporate and business banking portfolios were INR 10.38 billion in the current quarter compared to INR 6.86 billion in the previous quarter and INR 7.27 billion in Q2 of last year.

There were thus net deletion of gross NPAs of INR 0.53 billion in the current quarter in the corporate and business banking portfolio compared to net addition of INR 3.66 billion in the previous quarter and INR 0.05 billion in Q2 of last year. The gross NPAs written-off during the quarter were INR 22.63 billion. Further, there was a sale of NPA of INR 0.06 billion, mainly for cash in the current quarter. The nonfund based outstanding to borrowers classified as nonperforming declined to INR 23.22 billion as of September 30, 2025, from INR 32.98 billion as of June 30, 2025, and INR 33.82 billion as of September 30, 2024.

The loans and nonfund-based outstanding to performing corporate borrowers rated BB and below increased to INR 36.61 billion at September 30, 2025, from INR 29.95 billion at June 30, 2025, and INR 33.86 billion at September 30, 2024. This portfolio was about 0.3% of our advances at September 30, 2025. The increase during the quarter was due to the upgrade of certain borrowers having nonfund outstanding from nonperforming to performing status. The total fund base outstanding towards standard borrowers under the resolution as per various guidelines declined to INR 16.24 billion or about 0.1% of the total loan portfolio at September 30, 2025, from INR 17.88 billion at June 30, 2025, and INR 25.46 billion at September 30, 2024.

Of the total fund-based outstanding under resolution at September 30, 2025, INR 14.84 billion was from the retail and rural portfolios and INR 1.4 billion was from the corporate and business banking portfolio. At the end of September, the total provisions other than specific provisions on fund-based outstanding to borrowers classified as nonperforming were INR 26.2 billion (sic) [ INR 226.2 billion ] or 1.6% of loans. This includes the contingency provisions of INR 131 billion as well as general provision on standard assets, provisions held for nonfund-based outstanding to borrowers classified as nonperforming, fund and nonfund-based outstanding to standard borrowers under resolution and the BB and below portfolio. Moving on to the P&L details.

Net interest income increased by 7.4% year-on-year to INR 215.29 billion in this quarter. The net interest income was INR 216.35 billion in the previous quarter, which included interest on tax refund of INR 3.61 billion. The net interest margin was 4.30% in this quarter compared to 4.34% in the previous quarter and 4.27% in Q2 of last year. The benefit of interest on tax refund was 0 in the current quarter compared to 7 basis points in the previous quarter and 0 in Q2 of last year. The margins for the quarter reflect the benefit from the reduction in deposit rates and cost of borrowings as well as the impact of repricing of external benchmark-linked loans and investments.

Of the total domestic loans, interest rates on about 55% of the loans are linked to the repo rate and other external benchmarks, 14% to MCLR and other older benchmarks and the remaining 31% of loans have fixed interest rates. The domestic NIM was 4.37% in this quarter compared to 4.40% in the previous quarter and 4.34% in Q2 of last year. The cost of deposits was 4.64% in this quarter compared to 4.85% in the previous quarter and 4.88% in Q2 of last year. Noninterest income, excluding treasury, grew by 13.2% year-on-year and 1.3% sequentially to INR 73.56 billion in Q2 of FY 2026.

Fee income increased by 10.1% year-on-year and 10% sequentially to INR 64.91 billion in this quarter. Fees from retail, rural and business banking customers constituted about 78% of the total fees in this quarter. Dividend income from subsidiaries was INR 8.1 billion in this quarter compared to INR 13.36 billion in the previous quarter and INR 5.41 billion in Q2 of last year. The timing of receipt of final dividend depends on the annual general meeting of the respective subsidiaries, which are generally held in the first quarter of a fiscal year. The year-on-year increase in dividend income was primarily due to the receipt of interim dividend from ICICI Securities and ICICI Venture.

On costs, the bank's operating expenses increased by 12.4% year-on-year and 3.6% sequentially in this quarter. Employee expenses increased by 5% year-on-year and declined by 8.5% sequentially in this quarter, mainly due to lower provisioning requirements for retiral benefits. Nonemployee expenses increased by 17.3% year-on-year and 12.2% sequentially in this quarter. The year-on-year and sequential increase in nonemployee expenses reflects retail business-related expenses and festive season-related marketing spends. Our branch count has increased by 263 in H1 of the current year. We had 7,246 branches as of September 30, 2025. The technology expenses were about 11% of our operating expenses in H1 of the current year.

The total provisions during the quarter were INR 9.14 billion or 5.4% of core operating profit and 0.26% of average advances compared to the provisions of INR 18.15 billion in Q1 of 2026 and INR 12.33 billion in Q2 of last year. The sequential decline in provisions reflects the impact of KCC seasonality and healthy asset quality across segments. The annualized credit cost was about 40 basis points in H1 of the current year, similar to that in H1 of last year. The profit before tax, excluding treasury, grew by 9.1% year-on-year and 3% sequentially to INR 161.64 billion in this quarter.

Treasury income was INR 2.20 billion in Q2 of the current year as compared to INR 12.41 billion in Q1 and INR 6.80 billion in Q2 of the previous year. The lower treasury income during this quarter primarily reflects the increase in yield on fixed income securities. The tax expense was INR 40.25 billion in this quarter compared to INR 37.44 billion in the corresponding quarter last year. The profit after tax grew by 5.2% year-on-year to INR 123.59 billion in this quarter. Moving on to the consolidated results. The consolidated profit after tax grew by 3.2% year-on-year to INR 133.57 billion in this quarter.

The details of the financial performance of key subsidiaries are covered in Slides 33 to 34 and 53 to 58 in the investor presentation. The annualized premium equivalent of ICICI Life was INR 42.86 billion in H1 of this year compared to INR 44.67 billion in H1 of last year. The value of new business was INR 10.49 billion in H1 of this year compared to INR 10.58 billion in H1 of last year. The value of new business margin was 24.5% in H1 of this year compared to 22.8% in FY 2025 and 23.7% in H1 of last year.

The profit after tax of ICICI Life was INR 6.01 billion in H1 of this year compared to INR 4.77 billion in H1 of last year and INR 2.99 billion in this quarter compared to INR 2.52 billion in Q2 of last year. Gross direct premium income of ICICI General was INR 65.96 billion in this quarter compared to INR 67.21 billion in Q2 of last year. The combined ratio stood at 105.1% in this quarter compared to 104.5% in Q2 of last year.

Excluding the impact of CAT losses of INR 0.3 billion in this quarter and -- INR 0.73 billion, pardon me, in this quarter and INR 0.94 billion in Q2 of last year, the combined ratio was 103.8% and 102.6%, respectively. The profit after tax increased to INR 8.2 billion in this quarter compared to INR 6.94 billion in Q2 of last year. With effect from October 1, 2024, long-term products are accounted on a 1/n basis as mandated by IRDAI, hence Q2 numbers are not fully comparable with prior periods. The profit after tax of ICICI AMC as per Ind AS was INR 8.35 billion in this quarter.

The profit after tax of ICICI Securities as per Ind AS on a consolidated basis was INR 4.25 billion in this quarter compared to INR 5.29 billion in Q2 of last year. ICICI Bank Canada had a profit after tax of CAD 6.3 million in this quarter compared to CAD 19.1 million in Q2 of last year. ICICI Bank U.K. had a profit after tax of USD 6.4 million in this quarter compared to USD 8 million in Q2 of last year. As per Ind AS, ICICI Home Finance had a profit after tax of INR 2.03 billion in the current quarter compared to INR 1.83 billion in Q2 of last year.

With this, we conclude our opening remarks, and we will now be happy to take your questions.

Operator: [Operator Instructions] We'll take our first question from the line of Mahrukh Adajania from Nuvama.

Mahrukh Adajania: Congratulations. My first question was on growth. Do you already see green shoots on growth? Do you see growth accelerating after so many measures taken by the government? And will we reach like close to mid-teens by the end of the year? Is that an assessment we can make right now? That's my first question.

Anindya Banerjee: So I think whatever we have seen in the quarter, certainly, growth has picked up. So if you see the sequential growth in Q2 across all the -- the retail portfolio certainly has picked up, business banking growth continues to be strong, and we hope that these trends will sustain. We are positive on the growth outlook. We would not really be giving a specific year-end loan growth number. But certainly, both in terms of what is happening in the market and our own continuing investment in distribution and allocating capacity to the higher growth opportunities, that continues and we continue to focus on that.

Mahrukh Adajania: And would you see corporate picking up? Any comments on the corporate loan growth environment?

Anindya Banerjee: I think corporate India is very well funded. They have very strong balance sheets, and they have access to many forms of funding. So banks are just one of the things that -- areas that they look at. And we will take it as it comes. I think we are focused on overall the risk-calibrated PPOP journey, and that is how we will look at it. We are very active in the corporate space, but that may reflect more in our transaction banking income or the flows through us, current accounts, et cetera, and not necessarily in terms of loan growth per se.

Mahrukh Adajania: Okay. Got it. And my next question is on margins that they've held up pretty well compared to expectations. So this is the bottom, right? And from here on, do they stay stable without rate cuts or they can actually improve?

Anindya Banerjee: So I would say that you're right. I think margins have done better than expectations, both -- of course, quarter-on-quarter, yes. But I think broadly through the cycle where we are now at the -- after the large part of the rate cuts have played out, they have done well, which has been aided by the systemic liquidity and the continued healthy funding profile as well as, I would say, the discipline on pricing that we have had consistently over several years. From here on, our expectation is that margins should be more or less range-bound. We don't expect any major movements either way.

Mahrukh Adajania: Got it. But there would still be deposit repricing left, right?

Anindya Banerjee: It will move from quarter to quarter. So if we look at Q3, there will be, of course, some deposit repricing. There will also be the full CRR reduction, which will take effect. At the same time, it will be a KCC quarter, as we call it. So the level of nonaccrual will also go up. And of course, there are continuing competitive dynamics in the market. So all taken together, I would say that over the next couple of quarters, we see it being range-bound.

Operator: Next question is from the line of Harsh Modi from JPMorgan.

Harsh Modi: Fantastic set of numbers. Congratulations. The question is on CASA. Your CASA market share has been improving, if I look at on the average balance basis. Could you talk a bit about how much of visibility do you have in this continued market share gains on CASA? And what are the 2 or 3 areas where you expect relative advantage to sustain over, let's say, next 12, 18 months?

Anindya Banerjee: I think where the CASA growth has improved from over the last few years because these things really take root over a period of time. I would say 3 things. One, of course, is the steady expansion in distribution over a period of time. I think our digital platforms do help. Certainly, they are something that attracts customers to the bank and offers convenience to the customers and encourages flows to the bank. And third, I think there are specific segments that we have been focusing on over a period of time.

I think business banking is a great example, where while, of course, if the loan growth is visible, the CASA growth also in the business banking has been a contributor. Going forward, I think we certainly see the whole transaction banking space as something where we can do more given our distribution and our platforms. In the corporate space, where we have corporate relationships, we can further deepen the synergy of what we are doing on the retail side across actually both the deposit side and the loan side in the corporate ecosystem. And we also -- the synergy with the ICICI Direct through the 3-in-1 platform is another area where we could do a lot more.

So these are some of the levers that we have, which we believe will sustain the CASA growth going forward, it would be our objective.

Harsh Modi: Yes, makes sense, especially SME liability. The second bit is on your capital adequacy, 16.1% CET1 where if you include the profits. How do we think about the payout ratios with such a solid stock and flow of CET1?

Anindya Banerjee: So including profit at September, it was 16.35%, actually. I think this is kind of currently the level at which most of the large private sector banks, some of them are there, some may be a little higher, actually. So no specific plan on payouts. I think our view would be to maintain a strong balance sheet at all times and to leverage the capital for growth. That is what we will try to do.

Operator: Next question is from the line of Anand Swaminathan from Bank of America.

Anand Swaminathan: Sir, a couple of questions. Sandeep, first question to you, are you in a position to kind of give us any color on your intention to continue for another term? I think investors kind of have been looking for some clarity around that. Any color on that would be great. Number two, in terms of the trade-off between growth and profitability, we have now kind of sustainably developed the 30, 40 bps ROA difference versus even the next best peer. Are we kind of giving up some growth as part of it? Is there a scenario where we could accept a 10, 20 bps lower ROAs and go for higher growth? And where are we in that thought process now?

Any color would be great.

Anindya Banerjee: Yes. So I'll take both the questions, Anand. As far as the position of CEO is concerned, you are aware that there is still a year to go, and the Board will take a view and decide and disclosure will be made at the appropriate time. On the growth -- this trade-off point, we don't really look at it as a trade-off between growth and profitability. Our aim is and what we operate to is the risk-adjusted PPOP and that has to be done in a framework, which is sustainable, and we have to have an appropriate framework for pricing and then, of course, we can always tactically do trade-offs, keeping the overall opportunity in mind.

But by and large, it's -- we don't think about it in terms of a trade-off between growth and profitability. We think about it in terms of a sustainable sort of accretion to the PPOP over a period of time. And the ROA is more of an outcome. We have never targeted that we will have a 2.3% ROA or something like that. It's basically been an outcome of the way the business has evolved.

Anand Swaminathan: No, sure. It makes sense. I just wanted to -- so in your kind of mind, you're not leaving any growth on the table to achieve these ROAs. That's the point you're making.

Anindya Banerjee: I'm saying I don't think we are leaving any long-term PPOP growth on the table. We could always do a little bit more. Obviously, we certainly believe that we are not doing that as much as the franchise can deliver and it should deliver more over a period of time. But we would rather think of it in terms of the PPOP opportunity, risk-adjusted rather than loan growth per se.

Operator: We'll take our next question from the line of Kunal Shah from Citigroup.

Kunal Shah: Yes. So this again is, say, on the growth side, but particularly looking at the various segments of retail like, say, vehicle, obviously, the industry-wide volumes were down, but with the GST cuts, we have seen the momentum. So should we expect any uptick out there on the vehicle loans, how has been the initial maybe 15, 20 days of feedback? Plus personal loans, are we comfortable on the overall credit cost? When should we start to see the growth out there? It's been just flat on both year-on-year and a quarter-on-quarter basis.

So that's -- and even on the mortgages, obviously, it's competitive and not PPOP-accretive to an extent, but how should we look at the overall mortgage growth going forward? Yes.

Anindya Banerjee: So, as I said, overall, if you see the loan growth has picked up from 1% sequentially in the previous quarter to 3% in this quarter. And we are positive on growth both in terms of the market opportunity and the way we are continuing to gear up our distribution and allocate resources to growth segments and growth markets. So we would hope to see a growth in these segments. As far as the question on personal loans is concerned, if you look at the overall retail NPL, the additions have declined both year-on-year and sequentially despite the growth in the balance sheet. And we do see, I think, healthy asset quality across all the segments.

As we have said in the past, we had taken a number of corrective actions on personal loans in 2022-2023 and the cohorts of origination post that, we are quite happy with the performance. So we are increasing our disbursements there. It may take a little while to show up in book growth because obviously, there's a runoff as well. But in terms of doing more, we are quite happy to do, and we are moving on that front.

Kunal Shah: Okay. And then on the deposit side, so like LDRs have been expanding past couple of quarters, almost like 400-odd basis points kind of an expansion in the LDR. The pace on loan growth still seems to be higher than the deposit growth. It has helped manage margins as well. How would we look at it from here on, maybe the pressure on the repricing on the margins would be relatively low now at almost 87-plus LDR. How should we see this ratio settling? So maybe on the term deposit side, would we garner more of the term deposits just to make sure that it is in line with the loan growth from here on?

Anindya Banerjee: So I don't think that it's really right to compare the September LDR with the June LDR. First of all, LDR is just a quarter-end measure, whereas what happens on the balance sheet depends on what happens on an average basis. I think for most of the large banks, to the extent I've seen, LDRs would have gone up in Q2 because most of the large banks would have seen relatively lower growth and good deposit inflows and been carrying higher liquidity at the end of Q1. So I think LDRs have expanded across the system and at overall system level as well.

In fact, I would think that as the CRR cuts take effect in Q3, LDRs, the natural corollary would be that LDRs will go up further because that is what would happen when liquidity gets released. From our perspective, we are quite comfortable with where we are. I think our retail deposit growth term, CASA, current account growth is pretty good. We are quite comfortable with the current levels, and we have ability to grow further. On the wholesale side, we do optimize between various types of funding and that's the way we look at it. I think the current levels of LDR may be even slightly higher with a lower CRR requirement are quite sustainable.

Kunal Shah: Okay. Okay. And lastly, in terms of the RBI directions, any initial commentary in terms of the impact which we could see on account of ECL or maybe the risk weight benefit, which would come in, say, in the various rating of the corporates plus the home loans and the MSME?

Anindya Banerjee: On the capital side, of course, these segments will give a benefit. There are other segments where risk weights are being -- have been proposed to be increased where that would take away some of that benefit. But net-net, I guess, for most banks, it would be a positive. It's -- the guideline is still open for comments. So we'll have to wait to see what is the final guideline that RBI issues after whatever submissions they receive. Similar is the case with ECL. It's again open for comment, and we'll have to see what the final guidelines come out.

On ECL as far as the transition point is concerned, I think given the level of provisioning that we hold on the balance sheet, we should be okay. On the -- what credit costs will look like under an ECL regime on an ongoing basis is something we have to still work out and assess.

Kunal Shah: Got it. So contingency would be utilized at that point in time?

Anindya Banerjee: I think we have to just say that given the overall -- because we also provide, for example, on a pretty accelerated basis against NPLs. We hold provisions, other provisions as well, and there is the contingency provisions. So all of it, we'll have to reassess at that point in time given the totality of the provisioning on the balance sheet and what would be -- what the base ECL plus prudential floor suggest under the draft guidelines, we don't expect any impact as such.

Operator: Next question is from the line of Rikin Shah from IIFL Capital.

Rikin Shah: Few ones. First on OpEx, with festival-related nonsalary expenses coming in 2Q this year, should one expect a sequential decline in OpEx in the third quarter given that these expenses could have been front-ended?

Anindya Banerjee: So I guess in that line item, you see a decline. I'm not sure I want to say that there will be a decline in overall OpEx because we continue to invest, and we want to -- we are quite focused on the growth of the business. I don't expect sequential increases of the time that we have seen in this quarter.

Rikin Shah: Got it. Second is on retail asset quality. Until now, you've been saying that it has been stable for us. But if we look at the slippages, in absolute terms, they are down almost 7% Y-o-Y when your book -- rural plus retail book has grown 6%. So clearly, a huge delta. So are we in a position to now say that the retail slippage or the slippages or the overall asset quality environment has started to improve and not only just stabilize?

Anindya Banerjee: So I guess, as a starting point is that we don't think it was particularly bad at any point of time. I mean I think the -- for the last several years, banks has been reporting pretty good asset quality. If I look at the secured retail, I think it has been pretty stable, maybe getting marginally better for the last, I would say, 8 or 9 quarters. We did have some spike in the unsecured in the PL and cards.

And there, of course, the regulator took several actions, and I think individual banks like us would also have taken action, where I think that the benefit of those actions is starting to show up, which is why we are now growing those portfolios again.

Rikin Shah: Got it. And lastly, for one of the peer banks, we saw some PSL classification problem on the crop loans. Just wanted to understand how do you track the end use of the crop loans that you give out? And has there been any discussion around this on your portfolio as well with the regulator?

Anindya Banerjee: As our processes for the PSL classification and those get reviewed, regulator could always -- of course, can always examine and have a view, but nothing specific to call out at this point in time.

Operator: Next question is from the line of Piran Engineer from CLSA.

Piran Engineer: Congrats on a good set of numbers and Happy Diwali. So firstly, just on NIMs, why do you say they'll be largely range-bound for the next 2 quarters? I understand next quarter, you're talking about the interest reversals due to Kisan credit card, but why should the NIMs improve consistently for the next 4 to 6 quarters?

Anindya Banerjee: I think that we have -- I would say, been navigated the cycle reasonably well and the NIMs have come in at this level. Over the next few quarters, we will see, there are too many moving parts in terms of monetary policy, the competitive dynamic, loan mix and so on. So we will see it as it comes. We've not really taken a view on next year. For the next couple of quarters, it should be range-bound.

Piran Engineer: Okay. Let me hop on this in another way. Out of your INR 9.5 lakh crore term deposit book, how much was acquired in the last 6 months?

Anindya Banerjee: We don't really give data of that kind. I think on the NIM question, we've given our perspective.

Piran Engineer: Okay. Fair enough. Okay. Secondly, just moving on to this provision for retiral benefits. This was because of higher G-Sec yields or what caused this sudden...

Anindya Banerjee: So I think -- if you look at it, I think every year, there is some decline from Q1 to Q2 because in Q1, when the increments, et cetera, given the gratuity-related provisions and so on are -- we true them up. And we also have certain employees who are on pensions who are mainly retired colleagues who were earlier working with some of the acquired entities. And there, they are entitled to DMF allowance. And this year, there has been no increase in the DMF allowance. So those would be the 2 main factors.

Piran Engineer: Okay. So then if I have to think of it, think of modeling this going forward, clearly, 2Q should not be the current base to model growth of... [Technical Difficulty].

Operator: Piran, I'm sorry, your voice was breaking.

Piran Engineer: Am I audible now?

Anindya Banerjee: I don't have a -- but we have, of course, a sense of what kind of increments, et cetera, will happen. We don't -- we can't really model it for you. But as I said, over the next couple of quarters, I don't expect overall OpEx to increase at the pace at which it has in the current quarter.

Piran Engineer: Got it. Fair enough. And just lastly, getting back to Rikin's question on slippages. Now slippages are down meaningfully even if you adjust for the KCC portfolio. Is all of that improvement attributable to PLCC or are we seeing improvement in other retail segments also?

Anindya Banerjee: So we have given, first of all, the breakup between retail and rural and corporate and business banking. So there is actually a small net dilution in corporate and business banking. But I would say, you're right across most of the other retail segments.

Piran Engineer: No, I'm referring only to retail and rural, Anindya. So it's about INR 1,200 crore improvement.

Anindya Banerjee: In most of the other retail portfolios also, there has been some improvement sequentially.

Piran Engineer: Got it. Got it. Okay, that answers all my questions. Wish you Happy Diwali. And also just one request and I've made this in the past. If you could please do something about the Saturday results. It just gets too much for all of us. And I understand you all want to keep your data secret and no leakage and all of that. Maybe if you could release results on Friday night and then 9 a.m. on Saturday keep a con-call, that just helps us a lot. But please, just try to look into it.

Operator: Next question is from the line of Chintan Joshi in Autonomous.

Chintan Joshi: Can I come back on the capital points? Just the risk -- credit risk reduction seems substantial, you highlighted it's a net positive. Your CET1 ratios are also very high. I understand that's where the larger banks operate. But isn't there an opportunity here to grow at the pace you want to grow or take the opportunity that is on the table and yet improve payouts? Because from our vantage point, the top 3 banks in the system are swimming in capital. Just want to get some thoughts on how this might play out as the -- as you look -- as these guidance and the draft reports become more concrete?

Anindya Banerjee: So we will take a view at that point in time, if this is any way going to kick in 1.5 years from now. And it really, a lot of it depends on what is the position of the balance sheet at that point in time and which are the segments where we have seen growth. But overall, capital is not constraining us from growing. We are continuing to focus on the kind of growth that we want.

Chintan Joshi: Yes. In fact, your capital is -- your retained earnings is enough to grow already. On ECL, could you give us some color? From your last submission, you said there is no impact for you. So I'm assuming there's no impact, including the other provisions you have on the balance sheet. So you would assume that they will be utilized when you say no impact?

Anindya Banerjee: I guess, it depends on what form the final guidelines take, but we have to look at the total provisions on the balance sheet in totality, including NPL and other provisions, and we don't expect that there should be any impact.

Chintan Joshi: So it could even be positive because from what I can see, you have more than enough provisions on your balance sheet, and they will come back into your CET1 if they are excessive. So shouldn't this become almost CET1-accretive at some point?

Anindya Banerjee: Yes. We'll have to see. It's very difficult to say it now. In any case, this is something, again, which will really depend upon the balance sheet at the point of transition.

Chintan Joshi: And then final point, you are 1 of the 2 large players in salaried accounts. So how much of your salaried accounts come from the IT services area? There's so much hype around AI. Just wondering if there are kind of unemployment in that section, how much would it impact you? How do you think about that?

Anindya Banerjee: No, not just for us, for any bank with salaried accounts, the IT services sector and similar sectors would account for a good share of the salary accounts because they are a good share of employment in the country, salaried employment in the country. So far, we have not seen any impact.

Operator: Ladies and gentlemen, we'll take that as the last question for today. I now hand the conference over to management for closing comments. Over to you, sir.

Anindya Banerjee: Thank you very much, and wish you all a very, very Happy Diwali. Thank you.

Operator: Thank you. On behalf of ICICI Bank, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.